Boeing 787 delayed production is starting to hit supplier's costs -

The costs of delays to the Boeing 787 program are starting to emerge - Spirit Aerosystems Holdings Inc - which was a de-merger from Boeing that IPO'sd last year, posted quarterly profits lower than expected on 15% higher sales at US$980 Mn..

Spirit's principal business is making components for the Boeing 787 jet, forecast 2008 earnings of $2.30 to $2.40 per share on revenue of about $4.7 billion.

Now Spirit are warning lower than forecast earnings this year because of Boeing's decision to delay first deliveries of the 787 to early 2009. Expecting to ship parts for about 45 planes in 2008, they are in talks with Boeing to assess the impact of planned delays on cash flow, liquidity and the need for extra funding.

Boeing's Lego Airliner has just found another supplier. Boeing has just signed an agreement to partner with TAL Manufacturing Solutions Ltd (part of Tata Motors, part of the Indian Tata Group) to make floor beams using advanced titanium and composite materials, resulting in a “significant weight saving”, for the 787, in their new plant being set up in the Mihan SEZ.

Total weight was noted to be a serious problem by Morgan Stanley and CEO Scott Carson chipped in very smartly to say , " ..there is some more (weight saving to be done)" in the pre Christmas web conference Boeing held explaining their initial production delays 8 weeks after Pat Shanahan was drafted in to run the program. (India will be sourcing some US$86 Bn of commercial jetliners in the next two decades)

Last week CEO Scott Carson spoke at aerospace and defense conference hosted by Cowen & Co., in New York said Boeing has "great confidence that the airplane will be ready to go as we've scheduled it."

Claiming vuirtues out of a necessity he explained "We have taken advantage of the delays to make sure our system level maturity is coming along at a rate that will avoid problems as we enter flight test."

US military procurement from Boeing - major cost overruns

In a study of three multiyear Defense Department procurement programs, the Government Accountability Office (GAO) found that contracts with The Boeing Co. cost the government at least US$3 billion more than projected.

They provided details of the cost overruns..USAF paid US$16.6 billion -- US$2.3 billion more than originally estimated -- for 80 Boeing C-17A Globemaster aircraft. 232 Apache helicopters for the Army, cost US$2.1 billion, exceeding the original projection of US$1.6 billion. The US navy US$9.2 billion, or $381 million more than the original estimate, for 210 F/A-18E/F Super Hornet attack aircraft.

Please note Airbus Industrie, military cost overruns are NOT a form of hidden subsidy - so don't go on about it.

The first Airbus 380 0n commercial services arrives in London Heathrow at 1505 on March 18th - the Singapore Airlines daily Changi / London service.